New Delhi: Land acquired by Government or its
instrumentalities for a specific public purpose cannot be
changed and transferred to private individuals or corporate
bodies, the Supreme Court has held.
A bench of justices G S Singhvi and Sudhansu Jyoti
Mukhopadhaya said though Government enjoys power of "eminent
domain" to compulsorily acquire any land for public purpose,
yet,it cannot legitimise any fraudulent act of the
"The Courts have repeatedly held that in exercise of its
power of eminent domain, the State can compulsorily acquire
land of the private persons but this proposition cannot be
over-stretched to legitimise a patently illegal and fraudulent
exercise undertaken for depriving the landowners of their
constitutional right to property with a view to favour private
persons," Justice Singhvi writing the judgement said.
The apex court passed the judgement while dismissing the
appeal of certain corporate houses challenging the Karnataka
High Court`s decision to quash the acquisition proceedings of
over 37 acres of land in south Bangalore.
The Karnataka State Tourism Development Corporation had
acquired the private land through the State Government for
the ostensible purpose of a Golf-cum-Hotel Resort. However,
instead of constructing the resort, it chose to transfer the
land to a private real estate developer for a group housing
project; and also other corporate houses.
Aggrieved by the decision, the private land owners
approached the high court which quashed the acquisition
proceedings and directed that the land be restored to the
original owners. The land owners were also asked to return the
compensation received by them at the time of acquisition.
The corporate houses appealed in the apex court.
Upholding the high court order, the apex court said the
corporation had made a false projection to the State
Government that land was needed for execution of tourism
The bench said the minutes of the corporation`s meeting
showed that it did not have the required funds for the project
and instead wanted to transfer the land to a private builder,
"The Managing Director of the Corporation candidly
admitted that the Corporation did not have the requisite
finances to pay for the acquisition of land and that Dayananda
Pai, who had already entered into agreements with some of the
landowners for purchase of land, was prepared to provide funds
subject to certain conditions including transfer of 12 acres
34 guntas land to him for house building project.
"After 8 months, the Corporation passed resolution for
transfer of over 12 acres land to Dayananda Pai. The
Corporation also transferred two other parcels of land in
favour of Bangalore International Centre and M/s. Universal
"These transactions reveal the true design of the
officers of the corporation, who first succeeded in persuading
the State Government to acquire huge chunk of land for a
public purpose and then transferred major portion of the
acquired land to private individual and corporate entities by
citing poor financial health of the corporation as the cause
for doing so," the bench said.
Therefore, it said, the corporation did not have the
jurisdiction to transfer the land acquired for a public
purpose to the companies and thereby allow them to bypass the
provisions of Land Acquisition Act.
"The diversification of the purpose for which land was
acquired under Section 4(1) read with Section 6 clearly
amounted to a fraud on the power of eminent domain," the bench